Thursday, May 21, 2009

Banksters profit on deaths

This is not illegal, but it is certainly seriously creepy. The major banks funded their overinflated executive compensation plans by taking out life insurance policies on "hundreds of thousands of their workers, with themselves as the beneficiaries."

The insurance policies essentially are informal pension funds for executives: Companies deposit money into the contracts, which are like big, nondeductible IRAs, and allocate the cash among investments that grow tax-free. Over time, employers receive tax-free death benefits when employees, former employees and retirees die.

We're talking tens of billions of dollars worth of policies here among just the biggest banks. Helluva ghoulish tax dodge. Remind me again why we didn't just let these banks fail? [via]